CJEU rulings are a source of opportunities rather than threats to KRUK (Parkiet daily)

In an interview with the Parkiet business daily KRUK CEO Piotr Krupa commented on the small exposure and low risk of a negative impact on performance of secured debts under foreign currency mortgage loans in Poland following the CJEU ruling of October 3rd 2019.

 (…) Firstly, such debts account only for a minor part of total debt cases we have purchased. Foreign currency-denominated consumer and corporate mortgage debt represents just 3% of the PLN 7.1bn we expect to recover. Secondly, and more importantly, final court judgments with respect to most of these cases have already been awarded in favour of KRUK and cannot be appealed against. Moreover, no petition may be filed with a court to invalidate an agreement based on which another court has already issued a judgment. No court may reverse a final ruling of another court – according to the “res iudicata” principle. It is mainly for this reason that the risk of our performance being adversely affected by foreign currency corporate and retail mortgage debts combined is below 0.5% of KRUK’s total expected recoveries over at least the next ten years. Therefore, we are not directly affected by the CJEU judgments. I don’t understand comments claiming that such judgments could materially affect KRUK’s business. It is simply not true.

Mr Krupa also pointed to possible benefits of the CJEU ruling to the credit management industry, including increased supply of debt accounts offered for sale by banks in Poland.

(…) They may give rise to increased supply of debt portfolios as banks, recognising larger provisions for CHF-denominated mortgage loans, will post lower profits. This, in turn, will affect their capital structures, ability to pay dividend, and may ultimately prompt them to sell their debt accounts. The CJEU’s second judgment, the one concerning the fee refund, may also pose a serious problem to banks, which again is likely to boost debt portfolio supply. Also in this case, there is clearly no direct impact on KRUK’s business.

The quotes are taken from an interview with Piotr Krupa, KRUK CEO, conducted by Przemysław Tychmanowicz and published in the Parkiet business daily on November 16th 2019. The full article is available on the KRUK Investor Relations news page (news attachment) and on PARKIET’s website by following the link.

* as at September 30th 2019; quarterly report of the KRUK Group for the period from January 1st to September 30th 2019.